What changed in this filing

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Item 9A. Controls and Procedures

2025-02-28 compared with 2024-04-01 · 134 added, 119 removed, 509 unchanged (33% of the section changed)

7 unchanged sentences

summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

Changes in internal control over financial

There were no changes in our internal control

over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect,

our internal control over financial reporting.

Based on their evaluation of our disclosure controls

and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2024, our Principal Executive

Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective to provide reasonable

assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed,

summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated

to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding

required disclosure.

Limitations on the Effectiveness of Internal

Disclosure controls and procedures, no matter

how well designed and implemented, can provide only reasonable assurance of achieving an entity’s disclosure objectives.

The likelihood

of achieving such objectives is affected by limitations inherent in disclosure controls and procedures.

These include the fact that human

judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors

or mistakes or intentional circumvention of the established process.

Because of its inherent limitations, internal

control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods

are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the

policies or procedures may deteriorate.

All internal control systems, no matter how well designed, have inherent limitations.

These include

the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures

such as simple errors or mistakes or intentional circumvention of the established process.

Therefore, even those systems determined to

be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Because of the inherent

limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal

control over financial reporting.

However, these inherent limitations are known features of the financial reporting process.

Management’s Report on Internal Control

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of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S.

A material weakness is a deficiency or combination

of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement

of our annual or interim financial statements will not be prevented or detected on a timely basis.

An effective internal control system,

no matter how well designed, has inherent limitations, including the possibility of human error or overriding of controls, and therefore

can provide only reasonable assurance with respect to reliable financial reporting.

Because of its inherent limitations, our internal

control over financial reporting may not prevent or detect all misstatements, including the possibility of human error, the circumvention

or overriding of controls or fraud.

Effective internal controls can provide only reasonable assurance with respect to the preparation

and fair presentation of financial statements.

In connection with the audit of our financial

statements as of and for the years ended December 31, 2023 and 2022, we identified significant deficiencies in our internal control over

financial reporting and a general understanding of U.S.

As such, there is a reasonable possibility that a misstatement of our financial

statements will not be prevented or detected on a timely basis.

As we have thus far not needed to comply with

Section 404 of the Sarbanes-Oxley Act, neither we nor our independent registered public accounting firm has performed an evaluation of

our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.

In light of this deficiency, we

believe that it is possible that certain control deficiencies and material weaknesses may have been identified if such an evaluation had

been performed.

As of December 31, 2024, management assessed

the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial

reporting established in Internal Control-Integrated Framework of 2013 issued by the Committee of Sponsoring Organizations of the Treadway

Commission (“COSO”) and SEC guidance on conducting such assessments.

Based on that evaluation under this framework, our management

concluded that as of December 31, 2024, our internal control over financial reporting was not effective because of the following material

· Due to our small number of employees and resources, we have limited segregation of duties, as a result of which there is insufficient

independent review of duties performed.

· Due to our small number of employees and resources, we have limited segregation of duties, as a result of which do not have the ability

to implement internal controls over the granting of access to our IT environment.

· As a result of the limited number of accounting personnel, we rely on inexperienced staff and outside consultants for the preparation

of our financial reports, including tax preparation, which could require adjustments and lead to overlooking items requiring disclosure.

a result, we had ineffective controls over our financial statement closing and reporting process.

· As a result of the Company’s limited financial and personnel resources, there may be difficulties in timely analyzing and identifying

potential operational and disclosure transactions within management and to comply with financial reporting regulations.

We are working to remediate the deficiencies and

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the deficiencies and address material weaknesses.

Specifically:

We have hired our Vice President of Finance.

We have also hired additional outside consultants, and we will hire qualified personnel in our accounting department, especially to add an experienced accountant in a controller capacity.

We will continue to evaluate the structure of the finance organization and add resources as needed;

We are engaging an external accounting firm to supplement our efforts to the implementation of the COSO Framework for internal controls;

We will design and implement internal controls related to revenue and expenses recognition accounting;

We are initiating a comprehensive program and development plan to provide ongoing company-wide trainings regarding internal controls, with particular emphasis on the training of our accounting staff;

We are implementing additional internal reporting procedures, including those designed to add depth to our review processes and improve our segregation of duties;

We are updating our systems so that we may collect the information necessary to enable us to more effectively monitor and comply with applicable filing requirements on a timely basis;

We will continue to enhance risk assessment procedures and conduct a comprehensive risk assessment to enhance overall compliance;

We are redesigning and implementing common internal control activities;

and we will continue to establish policies and procedures and enhance corporate oversight over process-level controls and structures to ensure that there is appropriate assignment of authority, responsibility and accountability to enable remediating our material weaknesses.

In addition to the items noted above, as we continue

to evaluate, remediate and improve our internal control over financial reporting, executive management may elect to implement additional

measures to address control deficiencies or may determine that the remediation efforts described above require modification.

management, in consultation with and at the direction of our Audit Committee, will continue to assess the control environment and the

above-mentioned efforts to remediate the underlying causes of the identified material weaknesses.

In addition, we continue to evaluate, remediate and improve our internal control

over financial reporting, executive management may elect to implement additional measures to address control deficiencies or may determine

that the remediation efforts described above require modification.

Executive management, in consultation with and at the direction of

our Audit Committee, will continue to assess the control environment and the above-mentioned efforts to remediate the underlying causes

of the identified material weaknesses.

Although we plan to complete this remediation

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that permit the company to provide only management’s report on internal control in this annual report.

Changes in Internal Controls

No change in our internal control over financial reporting (as defined

in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the period ended December 31, 2024 that has materially

affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

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Corporate Governance

Our Board of Directors currently consists of seven

Our Board of Directors currently consists of five

Our Chairperson of the Board of Directors is Dr.

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Option Awards

Non-Equity Incentive Plan

Change in Pension Value &

Non-qualified Deferred Compensation Earnings

Non-Equity Incentive Plan Compensation

Change in Pension Value & Non-qualified Deferred Compensation Earnings

CEO, Secretary and Director

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The persons who served as affiliated members of

our Board of Directors, including executive officers, did not receive any compensation for services as directors in 2022 or 2023.

the date of this report, no director has formally entered into any compensation arrangement for services provided under consulting agreements

or employment agreements.

As of the date of this annual report, all directors have been issued 22,500

options per person pursuant to our 2018 Stock Option Plan and such options will vest over a period of one year.

In 2022, all independent

directors were paid $30,000 cash, except for Sheri Lofgren, Gregory Butterfield, and Sean Warren.

Sheri Lofgren received $32,500 for serving

as the chair of the audit committee.

Gregory Butterfield and Sean Warren received $10,000 and $15,699, respectively, for serving independent

board director.

Additionally, a company affiliated with Mr.

Pope received $20,000 for advisory services in 2022, which included $12,000

in cash and $8,000 in stock.

In 2023, all independent directors were paid $40,000 cash, except for Sheri Lofgren.

Sheri Lofgren received

$20,000 in 2023 for serving independent board director.

our Board of Directors, including executive officers, did not receive any cash compensation for services as directors in 2023 or 2024.

As of the date of this report, no director has formally entered into any compensation arrangement for services provided under consulting

agreements or employment agreements.

As of the date of this annual report, all directors

have been issued 2,250 options per person pursuant to our 2018 Stock Option Plan and such options will vest over a period of one year.

In 2024 and 2023, all independent directors were paid $40,000 cash.

Option Exercises and Stock Vested

On December 17, 2018, the Company adopted the

2018 Stock Option Plan (the “2018 Stock Option Plan”) whereby the Company reserved for issuance 1,000,000 shares of common

stock and agreed that such shares shall, when issued and paid for in accordance with the provisions of the 2018 Stock Option Plan, constitute

2018 Stock Option Plan (the “2018 Stock Option Plan”) whereby the Company reserved for issuance 100,000 shares of common stock

and agreed that such shares shall, when issued and paid for in accordance with the provisions of the 2018 Stock Option Plan, constitute

validly issued, fully paid and non-assessable shares of common stock.

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plans or non-nonqualified deferred compensation plans for its employees or directors.

Executive Officer Outstanding Equity Awards at Fiscal Year-End

Director and Executive Officer Outstanding Equity Awards at Fiscal

The following table provides certain information

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Incentive Plan

Payout Value of

Shares, Units or

Shares, Units

That Have Not

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December 30, 2032

December 31, 2033

December 31, 2034

Desheng Wang - CEO, Secretary

3 unchanged sentences

December 30, 2032

Irving Kau - CFO

August 6, 2029

December 31, 2033

December 31, 2034

Irving Kau - CFO

December 30, 2031

1 unchanged sentence

December 31, 2033

December 31, 2034

August 6, 2029

2 unchanged sentences

December 30, 2032

Sheri Lofgren

December 31, 2033

1 unchanged sentence

December 30, 2032

December 31, 2033

December 31, 2034

Narrative Disclosure Requirement Regarding

Awards of Options

The information required by this Item is

incorporated by reference to the sections of our 2025 Proxy Statement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

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Desheng Wang, CEO, and Director

Edward Lee, Chairman and Director jointly with Jennifer Gu, Former Director

Edward Lee, Chairman and Director

*Less than 1%

(1) Applicable percentage of ownership is based

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Our common stock is our only issued and outstanding class of securities eligible to vote.

As of December 31, 2023, there were 29,478,696 shares

of common stock outstanding owned by our officers and directors.

As of December 31, 2024, there were 3,965,065

shares of common stock outstanding owned or exercisable by our officers and directors.

CERTAIN RELATIONSHIPS AND RELATED

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Chief Financial Officer

Related party Transactions

Revenue generated from Vitashower Corp., a company

owned by the Chief Executive Officer’s wife, amounted to $0 and $41,536 for the years ended December 31, 2023 and 2022, respectively.

The accounts receivable balance due from Vitashower Corp.

amounted to $0 and $34,507 as of December 31, 2023 and 2022, respectively.

Service revenue generated from the installation of

home security equipment by AT Tech and AVX for one of the Company’s directors, amounted to $65,543 and $8,246 for the year ended

December 31, 2023 and 2022, respectively.

Director Independence

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Wang is also our Chief Executive Officer.

The rest of our directors, excluding Jennifer Gu, are independent directors.

The rest of our directors are independent directors.

PRINCIPAL ACCOUNTING FEES AND SERVICES

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(the “New Auditor”) as its independent PCAOB registered public accounting firm for the Company’s

fiscal year ended December 31, 2023.

The recommendation to engage the New Auditor as the Company’s independent registered public

accounting firm was approved by the Company’s Audit Committee and the Company’s Board of Directors as it being in the best

interests of the Company.

fiscal year ended December 31, 2023 and 2024.

The recommendation to engage the New Auditor as the Company’s independent registered

public accounting firm was approved by the Company’s Audit Committee and the Company’s Board of Directors as it being in the

best interests of the Company.

For the years ended December 31, 2024 and 2023,

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and other services.

EXHIBIT NUMBER

Articles of Incorporation , as filed with the SEC on December 26, 2013.

Amended and Restated Bylaws , as filed with the SEC on October 22, 2019.

of Incorporation of Focus Universal Inc., as filed with the SEC on December 26, 2013.

and Restated Articles of Incorporation of Focus Universal Inc., filed with the Secretary of State of the State of Nevada on December

13, 2024 , as filed with the SEC on December 18, 2024 (incorporated by reference to Exhibit 3.1 of Form 8-K filed on December

Certificate of Change filed with the Nevada Secretary of State on January 28, 2025 , as filed with the SEC on January 29, 2025 (incorporated by reference to Exhibit 3.1 of Form

8-K filed on January 29, 2025.)

and Restated Bylaws , as filed with the SEC on October 22, 2019.

Equity Incentive Plan , as filed with the SEC on December 28, 2018.

Promissory Note with Chase Bank, dated March 10, 2021 for $108,750 SBA Loan , as filed with the SEC on March 23, 2021.

Secured Promissory Note with East West Bank, dated January 8, 2021 for $1,500,000 , as filed with the SEC on March 23, 2021.

Loan Agreement with Golden Sunrise Investment LLC, dated March 15, 2021 for $1,500,000 , as filed with the SEC on March 23, 2021.

Company Guarantee Agreement with Golden Sunrise Investment LLC, dated March 15, 2021 , as filed with the SEC on March 23, 2021.

Secured Promissory Note with Golden Sunrise Investment LLC, dated March 15, 2021 for $1,500,000 , as filed with the SEC on March 23, 2021.

Employment Agreement by and between the Company and Irving Kau, dated November 3, 2021 , as filed with the SEC on March 31, 2023.

Amendment to I.

Kau Employment Agreement, dated November 21, 2022 , as filed with the SEC on March 31, 2023.

At the Market Sales Agreement, dated December 9, 2022, with Sutter Securities , as filed with the SEC on December 12, 2022.

Asset Purchase Agreement, dated December 19, 2022 with AT Tech Systems , as filed with the SEC on March 31, 2023.

Articles of Organization of Lusher Bioscientific, LLC , as filed with the SEC on March 31, 2023.

Bylaws of Lusher Bioscientific , as filed with the SEC on March 31, 2023.

Articles of Organization of AT Tech Systems, LLC , as filed with the SEC on March 31, 2023.

Operating Agreement of AT Tech Systems, LLC , as filed with the SEC on March 31, 2023.

Loan Agreement with Ziling Gao dated January 4, 2024.

List of Subsidiaries.

Agreement by and between the Company and Irving Kau, dated November 3, 2021 , as filed with the SEC on March 31, 2023.

Kau Employment Agreement, dated November 3, 2022 , as filed with the SEC on March 31, 2023 (previously mislabeled as Exhibit

Note with Chase Bank, dated March 10, 2021 for $108,750 SBA Loan , as filed with the SEC on March 23, 2021.

Promissory Note with East West Bank, dated January 8, 2021 for $1,500,000 , as filed with the SEC on March 23, 2021.

Agreement with Golden Sunrise Investment LLC, dated March 15, 2021 for $1,500,000 , as filed with the SEC on March 23, 2021.

Guarantee Agreement with Golden Sunrise Investment LLC, dated March 15, 2021 , as filed with the SEC on March 23, 2021.

Promissory Note with Golden Sunrise Investment LLC, dated March 15, 2021 for $1,500,000 , as filed with the SEC on March 23, 2021.

the Market Sales Agreement, dated December 9, 2022, with Sutter Securities , as filed with the SEC on December 12, 2022 (previously

mislabeled as Exhibit 10.1).

Purchase Agreement, dated December 19, 2022 with AT Tech Systems , as filed with the SEC on March 31, 2023 (previously mislabeled

as Exhibit 10.10).

of Organization of Lusher Bioscientific, LLC , as filed with the SEC on March 31, 2023 (previously mislabeled as Exhibit 10.11).

of Lusher Bioscientific , as filed with the SEC on March 31, 2023 (previously mislabeled as Exhibit 10.12).

of Organization of AT Tech Systems, LLC , as filed with the SEC on March 31, 2023 (previously mislabeled as Exhibit 10.13).

Agreement of AT Tech Systems, LLC , as filed with the SEC on March 31, 2023 (previously mislabeled as Exhibit 10.14.).

Agreement with Ziling Gao dated January 4, 2024 , as filed with the SEC on December 31, 2023 (previously mislabeled as Exhibit

Offer for Purchase of Real Estate with 620Magnolia LLC dated February 15, 2024, as filed with the SEC on February 27, 2024 (previously

mislabeled as Exhibit 10.1).

of Lease with 620Magnolia LLC dated February 22, 2024, as filed with the SEC on February 27, 2024 (previously mislabeled as Exhibit

Agreement with 620Magnolia LLC dated February 22, 2024, as filed with the SEC on February 27, 2024 (previously mislabeled as

Exhibit 10.3).

Rent Adjustment(s) with 620 Magnolia LLC , as

filed with the SEC on February 27, 2024 (previously mislabeled as Exhibit 10.4).

Offer, Agreement, and Escrow Instructions with Silver Music LLC dated May 7, 2024 , as filed with the SEC on July 8, 2024 (previously

mislabeled as Exhibit 10.1).

Industrial/Commercial Single-Tenant Lease with Veena Asset Management LLC dated July 8, 2024 , as filed with the SEC on July 8,

2024 (previously mislabeled as Exhibit 10.2).

Form of Placement

Agency Agreement with Univest Securities, LLC, dated September 15, 2024 , as filed with the SEC on September 15, 2024 (previously

mislabeled as Exhibit 10.1).

of Securities Purchase Agreement with certain Purchasers, dated September 15, 2024 , as filed with the SEC on September 15, 2024

(previously mislabeled as Exhibit 10.2).

Purchase Agreement dated November 16, 2024 with Alumni Capital LP.

, as filed with the SEC on November 16, 2024 (previously mislabeled

as Exhibit 10.1).

Insider Trading Policy

List of Subsidiaries , as filed with the SEC

on April 1, 2024.

Consent of Weinberg & Company P.A.

Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Policy for the Recovery of Erroneously Awarded Compensation *

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)**

for the Recovery of Erroneously Awarded Compensation , as filed with the SEC on April 1, 2024.

Press Release by Focus Universal Inc.

dated January 29, 2025 (incorporated

by reference to Exhibit 99.1 of Form 8-K filed on January 29, 2025).

Inline XBRL Instance Document (the instance document does not appear

in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)**

Inline XBRL Taxonomy Extension Schema Document**

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thereunto duly authorized.

Date:April 1, 2024

February 28, 2025

FOCUS UNIVERSAL INC.

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on the dates indicated.

Executive Officer, Secretary and Director

April 1, 2024

/s/ Desheng Wang

Chief Executive Officer, Secretary and Director

February 28, 2025

Focus Universal Inc., a Nevada corporation

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures